US Blacklists More Chinese Tech Companies, Escalating Trade Fight
(Bloomberg) -- The US government is blacklisting Yangtze Memory Technologies Co., Shanghai Micro Electronics Equipment Group Co. and dozens of other Chinese tech companies, ratcheting up a trade conflict between the world’s two largest economies.
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The Department of Commerce is placing the companies on the so-called entity list, meaning that anyone seeking to supply them with US technology will require a license from Washington — something that will likely be difficult to get. Bloomberg News previously reported that the US was preparing to add the companies to the list.
The lineup also includes Pengxinwei IC Manufacturing Co., better known as PXW. The fledgling chip business is run by a former Huawei Technologies Co. executive and is constructing facilities close to that company’s headquarters, according to public records and satellite photos. Huawei — a company already under strict US sanctions — was expected to buy most, if not all, of the output from that chip factory, Bloomberg reported in October.
The latest restrictions are part of a push to limit China’s access to advanced chipmaking and artificial intelligence technology, which the US wants to keep away from the Asian nation’s military. In October, the Biden administration unveiled sweeping measures that limit what US companies can sell to the country — and it’s been pushing for allies to go along with the plan.
The idea is to severely restrict China’s “ability to leverage artificial intelligence, advanced computing, and other powerful, commercially available technologies for military modernization and human rights abuses,” Under Secretary of Commerce for Industry and Security Alan Estevez said in a statement. “This work will continue, as will our efforts to detect and disrupt Russia’s efforts to obtain necessary items and technologies for its brutal war against Ukraine, including from Iran.”
Yangtze Memory and Shanghai Micro were added to the list out of concern that they’ll work with companies that the US has decided are either a risk to national security or support oppression by the Chinese government, including Huawei and Hangzhou Hikvision Digital Technology Co.
Yangtze Memory and Shanghai Micro are key to China’s efforts to build a domestic chipmaking business and wean itself off imports, particularly those from the US. In all, 36 companies are joining the entity list.
Shanghai Micro, better known as SMEE, is China’s leading lithography equipment maker. It’s a smaller rival to ASML Holding NV, the Dutch company whose machines are essential to the production of the most advanced chips. ASML’s technological advantage in that area is currently unmatched by any company anywhere, and the clampdown on SMEE will make it even less likely that a challenger emerges from China.
Yangtze Memory, meanwhile, is a supplier of flash memory chips — the kind of component that stores data in mobile phones and personal computers. The company was making rapid advances in its production technology, chasing manufacturers such as Samsung Electronics Co., Kioxia Holdings Corp. and Micron Technology Inc.
Yangtze Memory had been in talks to supply Apple Inc., which makes virtually all of its iPhones in China. The earlier rules announced in October had already hurt its access to production machinery. Now the entity listing further hinders its ability to compete.
For Beijing, the export curbs have added pressure to develop a homegrown chipmaking industry. The country has poured tens of billions of dollars into its domestic capabilities, with mixed results. Chinese officials are now readying an 1 trillion yuan ($144 billion) package to subsidize local chipmakers’ purchase from the nation’s equipment firms, Reuters has reported.
The latest announcement by the Department of Commerce also expands restrictions on AI technology. Cambricon Technologies Corp. and several of its affiliates, which are developing AI components or systems, were added to the list.
But the US also eased restrictions in certain areas. Some 26 entities will be removed from a preliminary “unverified list” because Beijing allowed US representatives to check that they’re in compliance with the rules. Nine Russian companies were also taken off the preliminary list, but they were put on the entity list because Moscow has prevented attempts to confirm how their technology is being used.
The full list of companies added to the entity list is:
Anhui Cambricon Information Technology Co. AVIC Research Institute for Special Structures of Aeronautical Composites AZUP International Group Co. Beijing HiFar Technology Co. Beijing Machinery Industry Automation Research Institute Co. Beijing UniStrong Science & Technology Co. Beijing Vision Strategy Technology Co. Cambricon (Hong Kong) Co. Cambricon (Kunshan) Information Technology Co. Cambricon (Nanjing) Information Technology Co. Cambricon (Xi’an) Integrated Circuit Co. Cambricon Jixingge (Nanjing) Technology Co. Cambricon Technologies Corp. CETC Cloud (Beijing) Technology Co. CETC LES Information System Group Co. China Electronics Technology Group Corp. No. 28 Institute Chinese Academy of Sciences Institute of Computing Technology Guangdong Qinzhi Technology Research Institute Co. Hefei Core Storage Electronic Ltd. Key Laboratory of Information Systems Engineering Nanjing Aixi Information Technology Co. Nanjing LES Cybersecurity and Information Technology Research Institute Co. Nanjing LES Electronic Equipment Co. Nanjing LES Information Technology Co. PXW Semiconductor Manufactory Co. Shanghai Cambricon Information Technology Co. Shanghai Integrated Circuit Research and Development Center Shanghai Micro Electronics Equipment (Group) Co. Shanghai Suowei Information Technology Co. Suzhou Cambricon Information Technology Co. System Equipment Co. of the 28th Research Institute (Liyang) Tianjin Tiandi Weiye Technologies Co. Xiong’an Cambricon Technology Co. Yangtze Memory Technologies Co. Zhongke Xinliang (Beijing) Technology Co. Yangtze Memory Technologies (Japan) Inc.
(Updates to include listing of Pengxinwei in third paragraph.)
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